Economic Survey 2024: Here Are The 11 Key Highlights

Finance Minister Nirmala Sitharaman on Monday (22 July) tabled the Economic Survey 2023-24 in the Parliament.

The survey said that the Indian economy is "on a strong wicket and stable footing, demonstrating resilience in the face of geopolitical challenges".

Here are the key highlights of the Economic Survey 2023-24:

1. Resilient Domestic Economy

India’s real GDP grew by 8.2 per cent in FY24, posting growth of over 7 per cent for a third consecutive year, driven by stable consumption demand and steadily improving investment demand, the survey said.

On the supply side, gross value added (GVA) at 2011-12 prices grew by 7.2 per cent in FY24, with growth remaining broad-based.

Net taxes at constant (2011-12) prices grew by 19.1 per cent in FY24, aided by reasonably strong tax growth, both at the centre and state levels and rationalisation of subsidy expenditure. This led to the difference between GDP and GVA growth in FY24, it added.

India's current account deficit (CAD) stood at 0.7 per cent of the GDP during the year, an improvement from the deficit of 2.0 per cent of GDP in FY23, the document said.

India’s external sector is being deftly managed with comfortable foreign exchange reserves and a stable exchange rate.

"Forex reserves as of the end of March 2024 were sufficient to cover 11 months of projected imports and more than 100 per cent of total external debt," it said.

Further, the Indian Rupee has also been one of the least volatile currencies among its emerging market peers in FY24.

India’s external debt vulnerability indicators also continued to be benign.

External debt as a ratio to GDP stood at a low level of 18.7 per cent as of end-March 2024. The ratio of foreign exchange reserves to total debt stood at 97.4 per cent as of March 2024, the paper said.

2. Financial Sector Outlook Appears Bright

The survey said that India’s banking and financial sectors have displayed a "stellar performance" in FY24.

"Double-digit and broad-based growth in bank credit, gross and net non-performing assets at multi-year lows, and improvement in bank asset quality highlight the government’s commitment to a healthy and stable banking sector," it said.

The document said that Indian stock market was among the best-performing markets, with India’s Nifty 50 index ascending by 26.8 per cent during FY24, as against (-)8.2 per cent during FY23.

The market capitalisation of the Indian stock market has seen a remarkable surge, with the market capitalisation to GDP ratio being the fifth largest in the World.

The presence of a robust Digital Public Infrastructure (DPI) and the greater involvement of banks and microfinance institutions (MFIs) have contributed to improved financial inclusion, the document said.

The insurance and pension sectors are also doing well, as indicated by their expanding coverage, it added.

3. Inflation Moderates Despite Global Challenges

Despite global supply chain disruptions and adverse weather conditions, domestic inflationary pressures moderated in FY24, the survey said.

After averaging 6.7 per cent in FY23, retail inflation declined to 5.4 per cent in FY24, the lowest level since the Covid-19 pandemic period, due to the combination of measures undertaken by the Government and the RBI, it added.

Prudent monetary policy response and calibrated trade policy measures by the Government, coupled with strong output growth, helped reduce core inflation to a four-year low in FY24, the report said.

Core inflation is measured by excluding food and energy items from CPI headline inflation. It assesses the underlying price trends by largely eliminating the impact of price volatilities arising from transitory supply shocks.

The survey highlighted that food inflation has been a global concern over the past two years. Due to extreme weather events, depleted reservoirs, and crop damage, India's agriculture sector faced challenges, giving rise to food inflation.

According to the survey, food inflation stood at 6.6 per cent in FY23 and increased to 7.5 per cent in FY24.

4. Effective and Efficient Government Programmes Key to Attain Developed Country status

India’s high and sustained economic growth in recent years is being accompanied by social and institutional progress, underpinned by transformational and effective implementation of Government programmes with an empowering edge that has become the hallmark of a transformed approach to welfare, the survey said.

Be it health, education, sanitation, digital empowerment, or quality of life in rural areas, each aspect of the social infrastructure ecosystem has made strides through effective planning and delivery of various welfare schemes.

The realms of health and education are witnessing turning points in quality and access.

Women-led development is being promoted with 360-degree enabling interventions for socioeconomic empowerment, the report said.

A slew of programmes for transparent and digitalised rural governance have accompanied a perceptible improvement in the standard of living.

"To attain the much-avowed status of a developed country by 2047, effective and efficient Government programmes and state-level initiatives, augmented by community participation, are key," the survey said.

5. Agriculture and Food Management

According to the Survey, the agriculture sector has grown at an average growth rate of 4.18 per cent per year in the last five years.

The country also has a comfortable stock of foodgrains, around 40 per cent of which is distributed to two-thirds of the population free of cost.

Further, India exports more than 7 per cent of its food grains.

The growth in the agriculture and allied sectors has contributed positively to the growth of the Indian economy.

However, specific challenges remain, including low productivity levels, the impact of variability in weather, fragmented land holdings and inadequate marketing infrastructure, that affect agriculture performance.

The growing significance of allied sectors such as animal husbandry, dairying, and fisheries in enhancing farmers’ income suggests that greater emphasis should be placed on tapping into the potential of these activities to boost farmers’ incomes, the report said.

Smallholder farmers’ incomes cannot be increased by producing rice, wheat, or even millets, pulses and oilseeds. They need to move to high-value agriculture – fruits and vegetables, fisheries, poultry, dairy and buffalo meat, it said.

Once the incomes of smallholders increase, they will demand manufactured goods, spurring a manufacturing revolution, the survey added.

Further, enhancing private sector investment in agriculture is vital to provide impetus to the agriculture sector, according to the report.

6. Employment and Skill Development

Indian labour market indicators have improved in the last six years, as per the Periodic Labour Force Survey data, with the unemployment rate declining to 3.2 per cent in 2022-23, the Survey said.

With artificial intelligence taking roots in several spheres of economic activity, job market must adapt while steering the technological choices towards collective welfare is key, it said.

To generate and sustain quality employment, agro-processing and care economy are two promising candidates, the latter also being a necessity for levelling the playing field for women in labour market.

The fillip to skilling has yielded progress while there remains scope for more, as only 4.4 per cent of young workforce is formally skilled.

Many regulatory clean-ups pose as low-hanging fruits of employment generation, including multiple state-level laws relating to use of land, sectors restricted for women workers, and apprenticeship promotion, the Survey said.

7. Focus on Small and Medium Scale Industries

"Industrial growth accelerated in FY24, with manufacturing and construction leading the way. Industrial GVA at constant prices in FY24 was 25 per cent higher than the pre-Covid FY20 levels, affirming broad-based recovery and consolidation," the report said.

Going forward, invigorating ongoing efforts to impart greater efficiencies, skills, and dynamics to labour-intensive segments like textiles, food processing, and MSMEs would lend greater balance to industrial expansion, it said.

Incentivising R&D investment, greater formalisation of smaller manufacturers, alleviating their supply chain bottlenecks, facilitating market access and improving access to finance will also foster industrialisation, the report said.

Further reduction in the compliance burden for MSMEs will considerably improve their growth prospects, it added.

8. Growth Strategy For New India

The report said that in the medium term, the Indian economy can grow at a rate of 7 per cent plus on a sustained basis if the government builds on the structural reforms undertaken over the last decade.

According to the Survey, the structural reforms of the last decade, focused on the supply side of the economy, have to give way to next-gen reforms that are bottom-up in nature to yield strong, sustainable, balanced, and inclusive growth.

9. Private Role In Infrastructure Development

The Economic Survey said that with increased public investment over the last five years, India has witnessed significant expansion in physical and digital connectivity and social infrastructure including sanitation and water supply helping to improve quality of life of the people.

"At the same time, given the fiscal compulsions and consolidation plans of the Union and the State Governments, it is important that viable projects on the public-private participation mode emerge and get executed," the Survey said.

Regular collection of sector-wise, source-wise information on infrastructure investment, bottom-up studies and aggregation of requirements of infrastructure and periodic assessment of utilisation of assets created will help making mid-course corrections on the country’s developmental path, it added.

10. Opportunities in Services Sector

The Survey said that the services sector has been a key driver of India's economic growth for over three decades.

Aided by the focus on policy and procedural reforms, physical infrastructure and logistics, all significant business, personal, financial and infrastructure-based services have emerged strongly from the pandemic.

"However, the transformation lies in the fast-paced shift towards digital services like online payments, e-commerce, and entertainment platforms, as well as the increase in the demand for high-tech services as inputs in other productive activities," the survey said.

It added that India's young and tech-savvy population offers an opportunity to enhance the country's vocational and educational ecosystem further.

"This will equip the labour force with the required digital and high-tech skills in a time-bound manner, helping India reap the full dividends of these opportunities," it added.

11. Letting Go is Part Of Good Governance

The Economic Survey emphasised the importance of reducing government control to enhance India's growth potential.

According to the Survey, despite significant economic achievements, including a rise in GDP from $288 billion in FY93 to $3.6 trillion in FY23 and improvements in poverty reduction and education, excessive regulatory burdens on businesses, especially small and medium enterprises, hinder further progress.

By easing Licensing, Inspection, and Compliance requirements, the government can foster a more dynamic and innovative economic environment, according to the report.

"The Indian state can free up its capacity and enhance its capability to focus on areas where it has to by letting go of its grip in areas where it does not have to. The Licensing, Inspection and Compliance requirements that all levels of the government continue to impose on businesses is an onerous burden," it said.

This approach, according to the document, aligns with the Ishopanishad's philosophy of renouncing control to achieve greater freedom and efficiency, benefiting both the governed and the governing.